An independent journal about the Gannett Co. and the news industry's digital transition

Friday, November 28, 2008

Documents reveal double-digit profit margins at scores of papers now on verge of massive layoffs

We've always heard that Gannett newspapers racked up double-digit profit margins, even as bad times engulfed the industry. But I've never seen actual numbers until now, because Corporate keeps the performance of individual businesses a well-guarded secret.

I've recently had an opportunity to review margins for most of GCI's U.S. newspapers as of a year ago (USA Today isn't included). They're disclosed in an internal report, the Cost & Statistical Summary, provided to me by a Gannett Blog reader; it covers the first three quarters (periods 1-9) of 2007. The reader asked to remain anonymous, citing possible repercussions if identified. The reader did not have more current data, for 2008. And the reader requested I not share copies of the report with anyone.

Green Bay: No. 1 at 42.5%The numbers are startling -- especially now, with Gannett poised to lay off perhaps thousands of newspaper workers next week in another bid to boost the company's flagging stock. Every newspaper except Detroit's was profitable a year ago -- although some, just barely so.

The Green Bay Press-Gazette was the star. It had the single-highest profit margin: 42.5%. In other words, Green Bay kept 43 cents of every dollar it took in. The paper's total ad revenue over the three quarters: $25 million. The report doesn't disclose circulation revenue for any paper. Applied only to ad revenue, then, Green Bay made around $10.6 million during the period. (Will Green Bay lay off workers next week? We'll find out.)

Now, some readers say these are, in fact, gross profit margins -- that certain costs must still be subtracted before you can get to "net" earnings. That may be true, but the reports I've got just say "newspaper profit margin." (See a screenshot of one report.)

The money-losing Detroit Free Press and the formerly Gannett-owned Detroit News are published by the GCI-controlled joint operating agency there. To be sure, several barely profitable papers may have dipped into the red since this report was published. The economy went over a cliff this year when the housing bubble collapsed, throwing the nation into recession. Yet, I imagine many of the papers listed below are still enjoying very healthy margins.

The Arizona Republic vies with USA Today as the company's biggest revenue generator. (Since USAT isn't included in these reports, the exact rankings remain unknown.) The Republic's margin was a solid 25.43%, on $319 million in total ad revenue during the three quarters.

Paper-by-paper: Margins, ad salesFollowing is the performance of more than 80 U.S. newspapers over the first three quarters of last year, ending about Sept. 30. Gannett's 17-daily U.K. Newsquest chain and the TV division aren't included. Total ad sales are provided, but not circulation revenue. (However, circulation is a fraction of the newspaper division's revenue: just 21% so far this year, says the third-quarter earnings report.)

Note that many newspapers are tiny revenue-generators. Also, names below are those listed in the report; some Wisconsin and Ohio papers are grouped together. To get a sense of an individual paper's profit in dollars, multiply the margin against ad sales.

Alexandria, La.: 20.56% margin; $9.7 million in ad sales

Appleton, Wisc.: 32.47%; $22.2

Asbury Park, N.J.: 19.16%; $82.3

Asheville, N.C.: 23.49%; $20.6

Battle Creek, Mich.: 13.05%; $6.7

Binghamton, N.Y.: 32.64%; $18.1

Brevard, Fla.: 24.68%; $44.8

Bridgewater, N.J.: 10.04%; $13.3

Bucyrus, Ohio: 9.59%; $1.0

Burlington, Vt.: 36.21%; $21.3

Central Wisconsin: 24.25%; $16.2

Cherry Hill, N.J.: 9.83%; $40.7

Chillicothe, Ohio: 22.3%; $3.4

Cincinnati: 13.97%; $111.9

Clarksville, Tenn.: 26.01%; $8.9

Coshocton, Ohio: 4.67%; $0.9

Des Moines: 24.58%; $71.0

Detroit: negative 4.96%; $164.8

East Brunswick, N.J.: 16.07%; $19.6

East Wisconsin: 29.75%; $77.8

Elmira, N.Y.: 19.2%; $9.0

Fond du Lac, Wisc.: 8.02%; $3.0

Fort Collins, Colo.: 30.97%; $16.2

Fort Myers, Fla.: 29.99%; $66.3

Freemont, Ohio: 11.89%; $2.6

Great Falls, Mont.: 21.18%; $9.2

Green Bay, Wisc.: 42.5%; $25.0

Greenville, S.C.: 27.29%; $45.3

Guam: 40.39%; $11.2

Hattiesburg, Miss.: 16.44%; $7.3

Honolulu: 3.33%; $76.6

Indianapolis: 24.97%; $116.3

Iowa City, Iowa: 15.17%; $7.0

Ithaca, N.Y.: 16.01%; $5.8

Jackson, Miss.: 25.94%; $34.5

Jackson, Tenn.: 15.14%; $10.2

Lafayette, Ind.: 27.85%; $12.2

Lafayette, La.: 33.52%; $23.2

Lancaster, Ohio: 15.15%; $3.0

Lansing, Mich.: 23.22%; $26.7

Louisville: 19.33%; $78.5

Manitowoc, Wisc.: 21.12%; $4.7

Mansfield, Ohio: 31.39%; $8.3

Marion, Ohio: 26.04%; $3.0

Marshfield, Wisc.: 15.23%; $2.2

Monroe, La.: 15.09%; $10.6

Montgomery, Ala.: 27.83%; $22.1

Morristown, N.J.: 14.93%; $16.4

Mountain Home, Ark.: 20.25%; $3.1

Muncie, Ind.: 24.0%; $9.5

Nashville: 21.38%; $93.1

Newark, Ohio: 17.25%; $5.1

NNC Ohio: 22.09%; $37.0

Opelousas, La.: 33.0%; $2.6

Oshkosh, Wisc.: 31.15%; $6.8

Palm Springs, Calif.: 37.98%; $40.2

Pensacola, Fla.: 27.10%; $28.7

Phoenix: 25.43%; $319.2

Port Clinton, Ohio: 2.74%; $0.8

Port Huron, Mich.: 17.58%; $9.0

Poughkeepsie, N.Y.: 27.84%; $20.0

Reno: 34.90%; $42.8

Richmond, Ind.: 18.17%; $5.2

Rochester, N.Y.: 28.48%; $62.3

St. Cloud, Minn.: 28.16%; $17.2

St. George, Utah: 29.91%; $13.7

Salem, Ore.: 32.95%; $23.2

Salinas, Calif.: 7.44%; $8.2

Salisbury, Md.: 26.74%; $16.8

Sheboygan, Wisc.: 24.01%; $6.7

Shreveport, La.: 29.22%; $23.9

Sioux Falls, S.D.: 36.55%; $23.7

Springfield, Mo.: 37.50%; $28.8

Staunton, Va.: 25.56%; $5.4

Stevens Point, Wisc.: 19.81%; $2.4

Tallahassee: 25.55%; $24.3

Tucson-TNI: 28.26%; $67.7

Tulare, Calif.: 39.93%; $2.4

Vineland, N.J.: 19.15%; $7.1

Visalia, Calif.: 22.87%; $9.2

Wausau, Wis.: 32.11%; $8.7

Westchester, N.Y.: 14.84%; $79.1

Wilmington, Del.: 25.08%; $54.7

Wisconsin RAPI: 19.92%; $2.3

Zanesville, Ohio: 23.08% margin; $4.0 million in ad sales

Earlier: We're building a paper-by-paper list of layoffs; just three papers are listed so far. Will yours be included when publishers disclose cuts next week?

119 comments:

3:32 pm: All the papers were profitable as of a year ago -- except for the Detroit Free Press. Since then, however, any number of Gannett papers may have become money losers this year after the housing bubble's collapse and the nation's dip into a recession.

Papers most at risk would be those that had low, single-digit margins a year ago.

Yes, Jim, thanks for publishing private financial information for all of our competitors, customers and the world to see. You and your mole have done Gannett a great disservice. Keep patting yourself on the back and telling yourself you are doing "God's work" as a "journalist."

You likely sleep well at night, knowing your efforts are potentially biting the former hand that once fed you -- and could even lead to more people losing their jobs as the economic downturn continues.

This is over a year old! I am afraid it is not relevant. Newsprint alone has gone up almost $300 per metric ton. Then begin adding in the significant revenue losses in classified, national and local advertising. I'm certain a more recent document would paint a different story.

However, several more marginally profitable papers may have dipped into the red since this report was published. The economy went over a cliff this year when the housing bubble collapsed, throwing the nation into recession. Yet, I imagine many of the papers listed below are still enjoying very healthy margins.

Stunning. Shows how profitable newspapers are in moderately good times. We need to balance this with the cost of labor and other data you have been given. I assume that would remain relatively constant, because corporate beggared community papers with 1 percent pay raises. Do we know if Detroit would have been be profitable if it didn't have to print and distribute USAT?

You have bemoaned in the past the fact that there are too few Newsquest contributors to the blog. It's hardly surprising when you run a piece like this, with no reference whatsoever to the UK. Even if you don't have the data (and I suspect you don't) surely the UK warrants a mention, at least acknowledging its existence?

3:48pm. In the media business, every media in a market has a pretty good idea how their competition is doing. The TV stations know how much each competitor takes in and has a good sense of the profit margin. Same with radio stations. And TV and radio has a good idea how well or poorly the newspaper is doing. I'm a blog reader who isn't Gannett, but I work for an electronic media entity in a Gannett market. As I looked at the data for the newspaper in my market, the profit margin didn't surprise me. It's the range I expected. (Though the margin is less than that for TV and radio stations). Based on their 9 month revenue, the newspaper's total year revenue is in the range of what we already thought it was. Again, no surprises. Now, seeing how thin the Gannet paper in this market has been most of the year, we can figure out how badly their revenue is off. (TV and radio revenue is off as well, despite our market being in a political battleground state). I'm sure, revenue wise, this newspaper is in bad shape, revenue wise, compared to last year. That puts pressre on the profit margin, hence expense cuts must be made. Some context. The media I work for has had a "good revenue" year, but we had to "lay off" people (less than eight). All good workers. We've cut lots of formerly necessary expenses (the unecessary was cut months ago). But there comes a point in which people have to get cut. Is the media I work for profitable? Hell yes. You must all understand that the first rule of a company (public or private) is protect the profit margin. You do that by either growing revenue or cutting expense.In the last big media recession (90-92), the non-print media I worked for (and still do, though we were a private company then) were down in revenue. Worse, our profit margins had slipped dramatically. We had to lay off people and pare expenses to get the profit margin where it needed to be. The profit was needed to pay off the loans the owner had taken out to buy the properties a few years earlier. No different from making sure you're in good standing with your lenders, if you're a public company. Cutting people was rough. But it was the LAST thing we did after cutting fat, muscle and bone. Those decisions still haunt me today.I know that won't make those of you fearing the bad news next week feel any better, but I wish I had been able to explain to those employees all those years ago why what happened happened.

Thanks for the information. As for those who claim this information will "arm the competition." What are they smoking?

These numbers are already known by the "competition." The people in the dark are our very own employees. My co-workers.

Yes the numbers this year will be of substantially but will pale in comparison to other industries/businesses especially when viewed as cash flow.

If the Company believes that print is dead...the words of a Company lawyer last week. Then why not sell off some of the weaker papers to local owners and invest the proceeds in the stronger papers/broadcast/digital area to beef up the product.

Sadly the digital idea of having dozens of web sites won't cut it. My guess is exclusive content is the answer and you gotta pay to get it.

Please keep the light on the company; illuminated for all the employees to see.

I think the biggest surprise of these numbers is that there are people in the company that don't have an idea of what their site is making. Media companies make a much higher margin than most other segments. Also consider, the margin has to go to pay for all that support that comes from corporate as well, so the margin for Gannett as a company is considerably less.

3:48 PMHey Gannett and the bullies they employ trample people for sport. You expect Jim or anyone else for that matter to give a flying !@#$% about the company. Besides the Kool Aid drinkers I would think most people especially Gannett Victims'' love that this is a place that the company gets a taste of their own medicine. I also like that NJ had lower profit margins. Just shows what a true know nothing Collins and his crew (special shout out to Skippy) really are/were.

5:37PM-5:40PM-- It took you three minutes to call Jim "unethical" and many of us who have been around for awhile wonder how it is possible for anyone who has experienced the lying and thievery and cruelty to level such a charge!

Remind us PLEASE of how ethical Gannett has been! Tell it to those who have been discriminated against by age! Tell it to those who have spent the past weeks in anxiety and uncertainty because of the Gannett "Ethics" of announcing that people would be thrown to the wolves but had to wait six weeks to know their fate! Tell it to the people who have accepted pitiful salary increases and "rigged" reviews for years!

Jim is a virtual Jesus Christ compared to the leadership of Gannett! Wake up!

Why would anybody be in a snit about this? Sit in a wet diaper too long today?

Good solid reporting, Jim. A nice read, some real news, good insight.If any Gannett property had this info for companies in its market it sure as hell would use it. I remember when our paper decided to publish (on-line) a data base of all state workers. Some of them cried in their strained yams, too.

Thank you for whoever got hold of this, and thanks to Jim. Now we need the skinny on USAT's profits and revenues, and that of the TV stations.I frankly never knew there was a Coshocton, Ohio, or a GCI paper there serving 7,000. If I were working for Honolulu, Coshoctin or Cherry Hill, I would be really sweating because those papers clearly were not making it well last year, and must really be hurting now.

6:53, If you think Gannett should investigate things that are unethical and out of line, maybe they should investigate what goes on in their own company. Illegal overtime practice, lying to advertisers about circulation numbers and the increasing number of advertorials. Mr. Publisher please do not get all high and holy on us now, it might make me vomit the leftover turkey.

Jim - THANK YOU. The profit margin for my site is insane. I knew it was large, but I had no idea it was that ginormous.

To everyone clamoring about how the figures aren't valid because they're a year old - They are entirely valid, as they shed new light on Gannett's modus operandi. We all knew the big bosses were profit-hungry pigs, but now it's documented. They were practically printing money on those presses. If you can't stash enough aside for a rainy day with a 25 percent profit margin, you don't deserve to manage the drive-through at Mickey D's. The businesses in my city's downtown district would loot, plunder and maim for those kinds of profits.

6:53, the alleged Publisher - I hope you have a firm grounding in business, because you clearly didn't come up through the news side. (Titles are only capitalized before the name, as in "Publisher Jack Ass." Read your paper once in a while.)

If your paper was leaked similar inside information about a local politician, government agency or business teetering on the edge of insolvency, I sure hope your EE would run a huge story. That's life in journalism. Your own reporters are trying to get their hands on that same level of information every damn day! They don't succeed all the time, but don't tell me your business editor wouldn't kill for such detailed financial information about a huge local employer. You and yours are just crying because your greed is now public, and you've been exposed for the pathetic rat-fuckers you truly are.

How is Gannett going to "investigate" Jim? There's not a damn thing the company can do to him, except spread the word that he's a loose-cannon, rogue-journalist type. And I expect he considered those possible consequences when he started this blog. He's aggressive, dogged and not afraid to start a fight. If I were in charge of hiring at the WP or NYT, I'd hire him in a second. (Sorry, Jim, I'm not.)

How is Gannett going to "investigate" the leaker? By tracking down every single person who had access to that data? Great. Waste your time on a witch hunt instead of making money. Sounds like Gannett priorities to me...

Okay, let's just look at 2007 since that is the information in front of us. That year and for years prior we were told we couldn't get raises, couldn't travel, couldn't do anything because there was no money. Now the truth is told. There is no way to express the depths of my disgust for this company. And I have to ask, where were all these profits going??? Jim deserves a Pulitzer. If Gannett was publishing this kind of information about Exxon, it would be prizeworthy. I predict a congressional investigation.

Okay, let's just look at 2007 since that is the information in front of us. That year and for years prior we were told we couldn't get raises, couldn't travel, couldn't do anything because there was no money. Now the truth is told. There is no way to express the depths of my disgust for this company. And I have to ask, where were all these profits going??? Jim deserves a Pulitzer. If Gannett was publishing this kind of information about Exxon, it would be prizeworthy. I predict a congressional investigation.

Jim is a true journalist and has done very solid work. This latest information regarding local newspapers and their sales and gross margins is terrific stuff. As someone said earlier, we've been continually lied to and kept in the dark. We've been limited to lousy pay increases (if any at all) and consistently told that there was no money. Now we see the truth and it is what we all expected all along. Gannett is a filthy organization who've proven time and again that they don't give a damn about the employees. Only the empty suits in Virginia and their direct report snakes make the money while they lie to the rest of us. And yes, Honolulu and Cherry Hill numbers (and otthers with the low margins) suck compared to the performance throughout the rest of the local newspaper organization. If Cherry Hill, Honolulu, Bridgewater and others like them don't take major hits in terms of reductions, it will be a real kick in the face of the rest of us who are suffering so much. The publishers at sites like these should be dumped along with their entire OC. Anyone else have any feelings along these lines?

There is a lot missing from your story and it’s rather obvious that you’d rather incite than investigate. It’s a reflection of the poor reporting that goes on throughout Gannett and part of the reason that people are leaving the newspaper and finding other sources for news.

Judging from the data you posted, someone passed along a report that shows each newspapers NIBT (Net Income Before Taxes). That’s a reflection of the cash brought in by the paper versus that newspapers own expenses. It is not a complete report by any means. Here are a few examples of real expenses not included in each papers NIBT:

• NIBT, that’s pre-tax revenue. Let’s estimate another 20 to 30% of that income going to the government in various taxes.• After that, you have additional capital expenses that are paid out upfront but depreciate over several years, so the site does not realize the full expense in a single year. These are generally financed by loans which in turn add interest payments to cover the company’s debt load.• NIBT does not include any charges for each papers share of the corporate expenses (although GCI buries some of that in the inflated prices each site has to pay for newsprint). • Add to that the company’s annual contributions to non-profits, employee matches, etc which are not included. • Add to that the dividends the company pays to it’s shareholders.

There are probably a hundred other items that don’t show up on the report you used.

While Gannett has enjoyed strong margins in the past, “The times, they are a changing!”

Someone here says that you deserve a Pulitizer for this piece. With the poor level of reporting in this story and the level of agreement from your blog junkies and whiners, it’s no wonder the newspaper industry is failing. Instead of a Pulitzer, I think you deserve a great big Raspberry!

A few weeks ago I said in this Gannett blog that the "dirty little secret" of Gannett and most other big media companies is the fact that despite the economy, these newspaper are ALL still profitable - they are just not being profitable to the LEVEL they were told to be when they made out their 2008 budgets last year!

AND EVERYONE whined and cried that I was an idiot, that I was wrong, etc....

WELL Look who is right all along!!!!! ME!! I told you so!

A TOLD all of you that even with cutbacks and layoffs, these papers are still making a profit.

One guy even said "You are an idiot. You don't know what you are talking about" Well I DO!

Look at the profit margins of these newspapers!

The net incomes must be enormous. "Net income" bu the way, is the money you make AFTER you subtract all your expenses from all your revenue. What is lest it the net income.

AND ALL THE GANNETT papers save Detroit (???) are making a healthy profit!!

This info will send shock waves through Gannett. Those poised to lay off innocent workers should think twice now. This is a time to all come together and fight Gannett. Expose what is really going on to The Washington Post or New York Times. This is developing into Enron kind of of stuff and deserves a full investigation by media and perhaps Congress. USA Today folks, you have the most clout and connections...you should be screaming at the top of your lungs about these injustices. When media companies' morals and ethics decay, democracy is at risk. We can't allow this. We have to speak up now, not after the layoffs. We need to clean things up and not just listen to our editors and publishers leading us off the cliff.

I knew something stunk about the USAT layoffs. We were lied to, plain and simple. There were several red flags about these layoffs. And last Monday's meeting raised a few more.

Lives are about to be ruined for no good reason. It's more than a shame. It's a call to action for all journalist who got into this business to report the truth. Now we have to report what's happening within our own companies because they are betraying us, freezing our pensions, laying people off, treating folks like idiots who will just accept whatever they feed us. We can do something about this, but we can't wait much longer.

Sorry.... I get to excited when I type. "Lest" is supposed to be "left." What is left after you subtract all expenses from revenues is net income. That is usually budgeted in 12 monthly increments or the "budget year."

The company gets an annual budget plan from each newspaper, where they "project" how much money they will make each month, what the expenses will be.

The company usually then ADDS money to what it expects each paper to make (Ha!) and wham! You have a budget.

Each newspaper is expected to "make budget" each month - keep expenses at or below what is budgeted, and revenue at or slightly ABOVE each month's budgeted revenue.

What is happeneing this year is that these newspapers are making money, but JUST NOT what Gannett asked them to clear each month....

The net income - bottom line, isn't as high as projected.

Here's another dirty little secret: Regardless of how much actual revenue a newspaper makes in a year, the NEXT year they are asked to make just a little bit more than that year's amount! So every year, the stakes get higher and higher and it gets harder and harder to make budget!

So...... all they layoffs are because the newspapers aren't many as mich money as they were SUPPOSED to make? Even though they are still making piles of money? Just not as much as the bosses at corporate want them to make???

To all the people who are slamming Jim for publishing this info: GFY. Now people who get laid off next week will know how truly unnecessary their job cut was. If you think that information should stay hidden from your coworkers, you are truly assholes.

at some point in time, you are really going to have to ask yourself why? why continue to hang on to a company that you left a year ago? what's in it for you? is your role now so important that you have become indispensable? are gannett employees so helpless?

my favorite comment tonight really is "Jim is a virtual Jesus Christ compared to the leadership of Gannett!" loaves and fishes or are you really in more of a chartlon heston moses role with part the seas?

The numbers in that report may be old, but remember the buyouts began in 2007 -- allegedly when the company was flush with profit.

And now, with all of the consolidation in the last year -- from the regional toning centers, to circulation and soon accounting? And what about all last year's buyouts, including Jim's, that are now expiring? Shouldn't the company be realizing millions in cost savings after the consolidations and the lapsing of buyouts on the payroll? And we still need to gut the newspaper division?

This is either severely unethical or we all just need better business educations to understand the justifications for the actions Gannett is taking.

People who say this post isn't relevant because it's outdated are missing the bigger picture. This demonstrates one of the largest problems with today's America -- the ridiculous levels of corporate greed.

It may be true that some papers are losing money now, but I doubt that GCI is losing money overall. All the time, you hear people say that the economy is as bad as it is because people aren't spending. The trouble is, regular people aren't spending because they are in fear of losing their jobs.

Gannett and other large corporations on the other hand are in a position to "take one for the team" and help the economy recover. But they are unwilling. Rather than operate on a 1% profit margin or break even for a year or so and help the overall economy in the process, they will lay off workers and scrounge for every penny until everything falls apart.

Keeping people employed at a time of record-breaking unemployment would mean the world to our country ... and it could ultimately help Gannett. But when your company is run by multi-millionares and billionares, they have no stake in the lives of ordinary people.

The numbers are relevant if only because they show that we've made enough in the past five years to easily weather a few bad ones.

Clearly, the lay offs are about stock prices and nothing else.

Anyone who thinks this information will help our competitors is a dimwit. If anything it should make stock prices rise. Newspapers are still highly profitable, and these numbers shouldn't surprise anyone who follows the industry closely.

10:12 The profits dont really stay at the papers lol. Its just allocations so that papers can be measured. So if it is true, and I have no idea, that corp charges off some of its expenses back to the local papers its just so that these expenses can be allocated closer to where they were used. Like some sort of management expense or something. This is all cost management accounting. Its like if paper A prints paper B's paper. Both A and B are Gannett papers. Paper A bills paper B ( and i believe that co policy says it can only be a 10 percent markup) the cost of the printing. Now its all Gannett money but its a way to keep track of what each property is doing. If they didnt, it would look like paper A was losing money and paper B was kicking ass. I know this is all basic accounting but it looks like you may have been a little lost.

Without having delved too deeply into the list, the single biggest surprise is the across-the-board failure of the N.J. properties to keep up with most of the others.

I can remember the panic/prep work involved three years ago when one of Bob Collins' "dollar drill" teams was sent to my former shop.

VPs and their direct reports spent what probably amounted to 1,000-plus man hours over a six-week period examining every expense line in the budget and expenditure in anticipation of being questioned about it by this terror squad that came in from N.J.

The truth is that the drill did have some positive results -- we found some expenditures that were unnecessary (for instance, we found one employee who had four cell phones and was using one them as personal phones) -- but when all was said and done there wasn't that much of a financial benefit to us. In the meantime, the VPs and direct reports were under unprecedented stress inflicted by a publisher who was otherwise rational and level-headed.

And now we find out that relatively speaking N.J. is a bunch of financial amatuers.

You know the saying: Those who can do, those who can't justify themselves by being a pain in the ass to the rest of us.

1. The report says the numbers are through Q3 of 2007. Does that mean Rev's ONLY reflect Q1-Q3?

2. If so, how does Q4 typically compare to the others? My guess is it may be the strongest quarter due to holiday advertising. This would change everything of course.

As others have mentioned, since Q3 of 2007 much has changed. Three quarters of severe gas increases, paper up as much as 30-40%, Health care costs up 10-15%. Etc, etc. Given these seismic changes, along with the incomplete nature of the revenue data, is this information really worth anything?

I'm the clueless person who got attacked for asking how much of the profit margin remained with the sites, and how much went to corporate. I honestly thought profits were used for raises and improvements. Sorry for being so stupid, but could someone please tell me where things like River States Publishing, Cape Publishing and all those things fit into this cash flow from the sites to corporate. (Type slowly. I'm smart, but not in a businessy kinda way).

There's more here than meets the eye. If the layoffs are to satisfy the few big investment firms focused on stock price, it seems almost completely irrelevant to profits.

I know a few of these markets and properties. Honestly, there are many, many ways they can increase profit and revenue without layoffs. Some have extra land and other unused assets. Most can consolidate print operations, especially logical with print circulation dwindling and online rising, as well as financial and human resources.

Yet, one of the biggest markets has made a conscious decision not to sell or rent property, or to make certain consolidations, according to a publisher I spoke with who would not explain why not.

So, it's not really about that bottom line now. It's about letting staff go, regardless of what it does to the bottom line -- which in some cases could hurt it as newsroom talent leaves.

I wonder why. The ubiquitous "Wall Street" may like to see what it thinks is fat trimmed, but it seems to me people shouldn't invest in businesses if they don't understand how the business makes money. Newspapers make money from unique advertising and newsroom talent, period. Reducing those staffs now makes no long-term profit sense. In fact, during an economic downturn when less profitable news companies must reduce staff, the most profitable one (Gannett) actually would be wise to sell assets if necessary to beef up its talent and snatch a bigger share of the market.

Do you suppose this is a shell game to dump workers, without DOL consequence, that GCI inherited when it bought up properties since the last economic downturn around 1990? The plan may be to hire talent laid off from NYT, McClatchy, Advance and other good news organizations -- or even some Gannetteers back -- in months to come as severances run out, and thus pay top talent GCI's low wages -- I mean, not just union busting but major deflation of the industry wage market. Or, maybe it's an excuse to look pitiful as an industry and go to Treasury for a free piece of taxpayer bailout pie, if Big 3 Auto succeed at same.

Besides holiday ads, Q4 boasts the bulk of election advertising. It may not have amounted to much in an off-year, like 2007, but it might have been significant in most U.S. markets in 2006 and this year.

3:25 p.m., I believe the layoffs are part of a broad plan to hire out some portion of the newspaper work to freelance/and or contract reporters and editors, including at USAT. I can't disclose why I suspect this, but I have good reason. Second, remember the ads Gannett is running to hire recent college graduates. They are the rest of the replacements for your position and mine. I do not believe these 3,000 jobs are actually gone, but will be filled with younger, less expensive employees. Your thought about people laid off from NYT, McClatchy being hired by GCI at lower salaries is interesting, but those relatively highly paid people are not going to move to Indianapolis, say, and accept the kind of life and salaries offered there. They will find jobs in other industries, some with better pay and benefits. I think most newspaper people who lose their jobs across the industry won't relocate. They tend to be older and tied to their communities.

So no one's going to respond to the critique at 9:14? Anyone? Bueller?

You don't have to love Gannett to bang your head against a desk upon reading Jim's analysis. I'm almost hoping I get laid off so I'll be free to do a critique of my own that won't be buried under a bunch of ass-kissing yes-men comments from the whiners who want to blame some corporate boogeyman for what's going on in their profession.

I can tell you this -- I'd guarantee you'll see comparable or even higher numbers at some other chains, some that we supposedly love (cough ... NYT group ... cough).

Also ... Jim? As I understand a profit margin, if you're making a 43% margin, you're not keeping 43 cents of every dollar you're earning. You're keeping 43 cents of every $1.43. No?

If I make $150,000 in revenue on $100,000 in expenses, my profit margin is 50%, isn't it? But I'm only keeping 33% -- my $50K profit out of $150K in revenue.

Speaking of profit -- since you've admitted you don't understand gross, net, pretax and posttax, shouldn't you take some of the money people are giving you and run it by someone who could make sense of these documents and perhaps compare them to other chains?

They do not include such things as depreciation, interest payments on debt, etc.

Still, the point is that newspapers generally remain profitable, even highly profitable. And the real adjustment going on is from the Green Bays, with a 40 percent plus budgeted margin, to those in the 8-10 percent range. As that happens, especially in a capital intensive business like newspapers, then there is real pressure to cover debt payments, etc.

And given that a huge fraction of costs are personnel costs, then the only place you can trim with effect is in payrolls.

Speaking as a Gannett layoff victim (in '06 - I beat the rush) I'm not surprised to hear this, and I echo what was said about older, veteran reporters being dumped in favor of entry-level grads. Green Bay also had the advantage of taking a few people from the old News-Chronicle (R.I.P.) who were making nowhere near Gannett wages and bringing them on at the same pay. (To be fair, they were among the first to go - I know of only four people from the N-C takeover who are still in either Green Bay or its outlying weeklies).

1) Newspapers go through business cycles like every other segment of the economy. So even if results at the moment are poor, relative to other segments, newspapers are still probably doing fairly well. And keep in mind, the figures are current enough in the sense they apply to the heart of a period when we've heard nothing but doom and gloom about the industry, which is supposed to be dying and collapsing before our eyes. Please.

And 2) In the more than 30 years I've been in the newspaper business (and I've worked all over the country, at large and small papers), all I've ever heard is how tough things are, how we have to cut expenses. Hiring freezes and layoffs have been a staple FOR THE ENTIRE 30 YEARS, even when newspapers were in absolute profit clover.

One is tempted to conclude--in the absence of voluntary disclosures of profit margins--that all this stuff about newspapers going under is so much propaganda. Maybe it isn't this time. But these worthless, counterproductive, grossly overpaid corporate jackasses we journalists are supporting with our modestly compensated labor have been crying wolf for decades. Why should we just automatically take them at their word now?

Why is it that no one ever discusses the idea of a "blue flu" at Gannett's newspapers? I think it's time for the newspaper talent to push back. Let the bosses try to put out a paper with 10 percent of the staff around to write, edit and design it.

Thank you Jim. It seems like you are getting back to the heart of journalism with the work you are doing here. It is much appreciated, especially to those of us who are being told (arrogantly) that we are lucky to have jobs.

these numbers, even if higher than exist now, are a compelling argument for the obvious way forward for print news - private ownership.Even at half these margins the return would be a wet dream for 75% of American business owners. Enuf with wall street's "jump higher and hang there" dictates. Take 'em private, as it was back in the day, and let chain ownership go the way of eight-track tapes and dial phones.Good reporting - thanks for this superb blog. If I had a job I would send you some cash!

I've never worked for Gannett (and maybe never will) but I really don't understand the hostility employees have about profit margins.Your company is a business and is supposed to be profitable. Your corporate staff is paid to make the company as much money as possible. How is that greedy? Its what they're paid to do. Have they ruined people's lives to maximize profits? Yes. Have Gannett reporters ruined people's lives to report the truth? Yes. Its what they're paid to do.But if you think people are doing their job unethically, that's different. That's when you decide to leave your current company. There are a lot of good ones out there (like the one I'm working for) and you should jump ship - not because people are doing their jobs, but because they are doing it with disregard for ethical behavior.

I have no problems with profit margins...as long as:1. the company is also concerned with the quality of its product, especially in journalism, which is considered an important enough product to be protected by the U.S. Constitution.2. When the profit margins are made by dumping older, higher-paid employees who provide needed experience and replacing them with recent college graduates who haven't the experience or talent - but who work for thousands less a year. If that's the only reason they are hired, the quality is going to suffer and the business will suffer in the long run to get short term gains.

As an ex-Gannettoid, there are lot of things I do like about the company - but their personnel policies where employees of long standing and loyal service are dropped for no reason other than profit margins are not part of them. I guess the previous poster doesn't believe in corporate citizenship.

I was in Salem during this time period and there was a corporate wide hiring freeze during the same time period - at least that's what the suits told us. Anyone that worked there knows how to pronounce the company's name "Gan-Net" with the emphasis on net. They were terrible to work for. In fact, worse than any other company I worked for in 10 years and that is a very bold statement.

As far as the person who contends you're not doing "God's work," I heartily disagree.

I have watched Gannett destroy my hometown paper over the last four years, and some of the most experienced, most talented journalists have left because of buyouts and contentions that the paper has to cut, cut, cut. And to see that the paper has double-digit profits is outrageous. The paper's management has consistently told us readers it "had" to cut newshole and product quality because the economy was so bad.

Just confirms my decision to quit my subscription. Which, by the way, went up in cost last year, when my paper had double-digit profits.

Keep up the good work. When newspaper consider the bottom line over their public-service mission, they deserve to be called out.

I realize this is Gannett Blog, but I would love to see how McClatchy compares. I took a buyout from one of its papers, which had been pulling in a lackluster 15-17 percent, down from the low 20s a few years ago. Embarrassing, I know.

Nice job on this. This is fantastic. Please post the profit margins for the papers that were owned by Gannett in 2007, yet they're no longer Gannett papers (e.g. the Norwich Bulletin, Utica Observer Dispatch, etc.)

1.) these figures are seriously out of date, considering the downturn so far this year. Your source needs to give you more recent numbers.

2.) Some people, including some journos, immediately switch into stereotyped thinking whenever they see the word 'profits.' There is no confirmation in this blog that these are bottom-line earnings for this segment of the corporation. That's what counts. These are fun numbers but they generate as much heat as they do light.

3.) It seems a bit odd that there is no mention of anyone visiting the Gannett web site to check on the company's actual, current financial picture. For example, third-quarter publishing gross revenue is down 14 percent. (Classifieds ad revenue way over the cliff.) Publishing expenses down 7 percent. Company isn't growing its revenue. And it isn't cutting costs fast enough to match the decline in income. Sorry to put it that way but that's how outsiders will see it.

Bottom line, newspapers have been profitable in the past; some still are, but much less so. And the financial numbers continue to spiral down.

This report tells me bloggers can be legitimate, indispensible news sources. Mr. Hopkins has scored a huge scoop on this blog. I never thought I'd see the day where individual Gannett property profit margins would be published. I'm pleased the story broke on this blog -- it is inspiring to see a true reporter and one-man online operation cultivate such a crucial source.

It's one more nail in the coffin of the daily newspaper print product -- that expensive medium perpetuated by stodgy groupthink.

In none of the above does anybody ask how much of the newspapers' profit margins go to pay Gannett's huge debts. Does everybody simply think that those newspapers' profit margins are end profits that just go into the pockets of the company's executives and stockholders?

Follow the money to the end, not to some mid-point, such as the newspaper properties' profit margin:

Gannett's 2007 annual report stated that $1.63 billion in cash was spent servicing debt (mainly from the costs of purchasing the newspaper properties that now make up the corporation). This debt service was equivalent to 22 percent of Gannett's entire gross revenues before any expenses last year.

Indeed, Gannett's most recent quarterly report stated that $508 million was spent servicing debt, while the corporation's gross revenues were only $1.637 billion. These quarterly figures indicates that debt service will likely be equal to 31 percent of Gannett's gross revenues this year.

Debt service is paid from those newspaper profit margins.

Do the end math: If the average Gannett property has (let's guess) a 27 percent profit margin and all the properties gross revenues total $6.54 billion (4 x $1.637B per quarter) this year, that will yield $1.766 billion in profit margin from the newspaper properties. However, if the corporation then has to pay $2 billion (4 x $508M per quarter) in debt service when it'll only have $1.766 billion in profit margin, then it's no wonder the company is laying people off right and left and the stock price is tanking (i.e., there will be no dividends if the company has a quarter billion loss after its debt servicing).

Most newspaper corporations' huge debt loads are why they are having so hugely to cut staff. The debt loads are also why Wall Street nowadays doesn't see any upside to those businesses anymore.

re Gannett's corporate debt: So what? So the corporate side the of the company piles up a huge debt load acquiring profitable newspapers that, it turns out, aren't profitable enough to support the debt load. Then the company goes about axing jobs and journalists to make the profitable papers even more profitable to support the debt load..Is this the journalists' fault? Is this the fault of the communities in which readers will be ill-served by newspapers newly hollowed out because Gannett HQ halfway across the country stupidly decided to buy another paper halfway across the country? .Just how screwed up is it to think that corporations exist only to return profit to shareholders? Again, the main function of these prima donna entities known as corporations is to turn out the best products and services possible while providing the greatest social good possible, chiefly by employing actual human beings at the best wages possible with the best benefits. Only AFTER they do all this should shareholders expect to maybe make a little money in the deal..If this isn't the case, then why in the world should we, the public, grant shareholders the extraordinary privilege of being able to invest in something with none of the responsibilities and obligations that normally accompany ownership? .The notion that profitable and otherwise perfectly viable newspapers should be gutted just to service some gigantic gold-platged corporate parasite that has managed to sink its filthy claws into the industry is galling.

Like it or not, that was the 'deal with the devil' when Gannett went public decades ago.

Whether you like the fact or not, corporations do exist solely to provide dividends to their shareholders. As law courts constantly point out, it is a corporation's fiduciary duty to do so. It isn't the corporations' duty to put out good newspapers, serve the community, etc.

Back when Gannett was rolling in advertising, circulation, and dough, its employees -- including its journalists -- were mighty proud of the corporation and how it gotten to be that way. Didn't anybody wonder about the faustian bargain that Al Neuharth (and Paul Miller before him) made with Wall Street to transform Gannett into a major media corporation during in the late 20th Century?

Don't get me wrong: I'm with you about how things should ideally be. Indeed, that's why the Crosbie family has been publishing a locally-owned and locally-operated daily newspaper (Willimantic, Conn.) since 1877 and never converted it into a publicly-held corporation. It's why we've no debt and no stockholders who haven't actually worked for the paper.

Gannett literally sold its soul to Wall Street decades ago. That devil now wants it due, and the corporation's employees and customers are who'll now burn because of that deal.

Yes, newspapers have traditionally enjoyed very high profit margins. Being that our country was founded on capitalism, I have no urge to diminish them for it. The goal of any successful business is to make a profit. Soft drink makers, electronics companies, radio stations, insurance companies and banks don't exist to improve the conditions of the working men and women in the world: they exist to provide products and services that will generate profits.

It could be argued -- with some credibility -- that the emphasis on higher profits has hampered quality journalism and that the reduction in quality journalism has resulted in lower profits and lower circulation numbers causing a cycle that seems to be chasing itself down the drain. It could be argued that sustaining the business seems less important than milking it for quick bucks. But to condemn any business for its profits is a failure to understand what the business is designed to do. It is ALL about dollars in the end.

Technology (first radio, then TV, then the magazine boon of the 1970s and 80s, then the cable TV boon, then the internet boon) has also taken a bite out of those profits. But if no one is getting paid at the end of the day, what's the point?

Journalists don't want to work for free; neither do corporate financiers, bankers and CEOs. Profits are not a bad thing in and of themselves. And when they go away -- or even fall -- cuts often are made. This is capitalism. It may not be a good plain for sustaining a business, but it is common practice across all business models.

Wow, I'm reading these posts now because I'm working on a research paper for school. Nothing he posted is top secret information. I guess that just goes to show how bad journalism has gotten that anyone thinks this information is hard to find or is top secret.

Jim says: "Proceed with caution; this is a free-for-all comment zone. I try to correct or clarify incorrect information. But I can't catch everything. Please keep your posts focused on Gannett and media-related subjects. Note that I occasionally review comments in advance, to reject inappropriate ones. And I ignore hostile posters, and recommend you do, too."